[VS1999]

>To add insult to injury, means testing[2] often costs more than the cost of fraud in social benefit programs! Not to mention, the biggest fraudsters with Medicaid are providers not recipients.

Intuitively, I'd expect fraud to go up (at least to some degree) as means testing goes down like a differential equation. The depressing part of this is that it doesn't matter what is actually true, or what either of us are convinced is true, as the system will do its own thing.

[AnthonyMouse]

"Eliminate means testing" doesn't mean that you stop verifying if someone qualifies for the program, it means that you stop imposing conditions on qualifying for the program, i.e. turn it into a tax credit that everybody gets unconditionally, and adjust rates to compensate.

In principle you can do this without affecting the budget at all -- if there is a benefit that phases out at, say, 20% up to $30,000 in income, this is equivalent to paying the benefit unconditionally and increasing the marginal tax rate by 20% in the same income range. All it does is eliminate the application paperwork.

In practice the problem is that there are multiple overlapping programs like this, so the poor aren't paying a 20% marginal rate (on top of any formal taxes), it's more like 60-80% and in some cases it even exceeds 100%. This is a poverty trap. But to get out of it while balancing the budget you'd have to use a lower total phase out rate, requiring higher marginal rates on people who make more money. These people -- as much upper middle-class doctors and computer programmers as Jeff Bezos -- then object to this, and so here we are.

Of course, another way to do it would be to cut some other government spending and use the money for this.